Profits at Nintendo soared 34 per cent higher in the first half of the year, providing hope for the Japanese titan that its “cheap and cheerful” DS and Wii machines may prove the ultimate Christmas recession busters.

Although the company saw brisk, rising sales of its consoles and games between April and September, Nintendo was forced to guide investor expectations lower. Its forecasts for the full year to next March took a 3 per cent trim as the Japanese market digs in for the effects of a global recession and consumer slowdown.

Alongside the rest of Japan’s huge export sector, Nintendo has been hurt by the yen’s recent surge against the US dollar and euro — the two currencies that matter to Nintendo’s bottom line. The company is at least better insulated than most — it has huge reserves of yen that it can deploy, however bad future cashflow issues become.

Nintendo, whose shares have tumbled heavily over the past few months, is a sharp divider of investment opinion. For two years running, the company has held the corporate excellence crown of Japanese firms. Analysts who support the stock, such as Atul Goyal of CLSA, are convinced that lifestyle-oriented products, such as the Wii Fit and “brain training” software, will buck the traditional pattern of games sales and continue to sell strongly months and years after their launch.

Others point out that software sales for the DS are falling in Europe for the first time since the launch of the handheld machine. The same analysts complain that after a blistering start with games, such as Wii Sports and Mario Galaxy, Nintendo has not established a compelling pipeline of new titles to keep gamers spending through the impending slowdown.

“Nintendo is behaving as if Christmas is going to come as usual and that could be a big assumption to make”, said Hiroshi Kamide of KBC Securities in Tokyo.

Others argue that Nintendo’s products will share the strong sales pattern of toys during recessions — priced intelligently, toys are able to come in under the radar of household belt-tightening efforts and are purchased to compensate for other activities, such as holidays that may be cancelled as recession bites.

Times Recommends

• Gazprom brands Ukraine 'a barbarian' in gas row
• Services sector raises fears over UK jobless
• Retailers surge as profits survive sales plunge